What Is FDIC Insurance?

FDIC insurance is the bedrock of depositor confidence in the American banking system. Established in 1933 in response to thousands of bank failures during the Great Depression, the Federal Deposit Insurance Corporation guarantees that if an FDIC-insured bank fails, depositors will recover their money up to the coverage limit of $250,000 per depositor, per insured bank, per ownership category.

The "per ownership category" distinction is important: a single person can be insured for more than $250,000 at the same bank by holding funds in different account types. For example, $250,000 in an individual account, $250,000 in a joint account, and $250,000 in an IRA at the same bank would each be separately insured, providing up to $750,000 in total coverage.

FDIC insurance covers checking accounts, savings accounts, money market deposit accounts, certificates of deposit (CDs), and certain retirement accounts. It does not cover investments like stocks, bonds, mutual funds, or cryptocurrency, even if purchased through a bank. Importantly, your coverage travels with the bank's FDIC certificate number, if your bank is acquired by another bank, your coverage follows your deposits to the new institution.

Since the FDIC's founding, no depositor has ever lost a penny of insured deposits. Even during the 2008 crisis and the 2023 bank failures (Silicon Valley Bank, Signature Bank), insured depositors were made whole. The FDIC typically arranges for a healthy bank to acquire the failed bank's deposits, so customers often experience minimal disruption.